Debate about the tensions in the hotel room distribution market is usually dominated by the battle between direct distribution and the large global OTAs.
Hotels understand the value global online marketplaces like Expedia and Booking.com offer, but baulk at sky high commission levels and yearn for the days they paid traditional agents just 10%.
So could a new third way rise to prominence and could this be driven by one of those bastions of third party distribution, a Global Distribution System? Amadeus certainly thinks so.
Peter Waters, director of hotel distribution at Amadeus, says the firm has been putting huge efforts into its hospitality distribution platform.
Amadeus is looking to replicate the success it has in its airline division developing the core systems that run carrier such as BA.
Intercontinental Hotels Group was the first big name customer to start rolling out Amadeus’s Global Reservation System to its portfolio of 4,800 properties.
However, Amadeus is also looking to make strides in the distribution side too.
Waters said: “We are becoming one of the biggest marketplaces for hotel content globally. We have ambition to become the largest provider of hotel accommodation.
“We have expanded from traditional city break hotels to include resort and leisure hotels and have added all commercial models relevant to our customers; pre-paid, pay on reservation or checkout.”
In four years Amadeus’s hotel offering has grown from 120,000 unique properties to 400,000 and Waters says its web services channel is growing at a compound rate of 90% year on year.
“All parts of the portfolio are growing very rapidly,” added Waters. “We offer more choice now to the professionals. They can choose which channel to book through be it chain direct or aggregator.
“We provide all inventory in a single display and they can choose through whom they want to buy it.
“They can select which rate they want to purchase and they understand as a professional agency what rewards they are going to get.”
Waters said this means the end customers gets what is best for them, and the agent receives a fair reward for the service they offer.
“A lot of hotels are saying they are suffering by having to pay so much commission to online sites. We are trying to provide more choice, but fare reward for the intermediary.
“Hotels know the GDS cannel is very cost effective for them. They are sold through professional channels at the other end. There is price sensitivity but it’s more of a service model.
“The economics of putting inventory through someone else’s .com is making a lot of hotels think twice. On the other hand it’s very challenging for hotels to try to go direct.
“They will by trying to build loyalty but they will need intermediary partners to get them access to regional bookers, travel agencies and TMCs which provides a lot of loyalty itself.”
Waters said the rise of metasearch as only heightened the disparity between the direct and online channels because hotels have to pay high commissions on low-priced product to be competitive.
He added hotels are therefore prepared to offer special rates through the GDS channel not available elsewhere because it seen as a value channel.
Having the hotel system fully integrated into the agents’ workflow technology also offers cost and time efficiencies and ensue that appropriate accommodation is cross-sold to airline seat bookers.
Amadeus Cross-Sell and Cross-Sell Notifier are two services that will be piloted in Europe in August before wider roll out.
Waters says Amadeus has now reached a critical mass of hotels in the system having secured relationships with most of the large scale content provider.
The GDS is now focused on adding more boutique properties and on certain destinations where it needs more inventory, asking agency partners what they would like in the system.
It will then target these areas with its own representation division rather than looking to bring in more bed banks.
The final piece of this jigsaw is to make all this content presentable, useful and comparable without a set of agreed industry data standards.
Amadeus has built its own content management system that aggregates content from multiple sources and attributes that to a particular property’s unique address.
A new technology ‘logic layer’ will then ‘normalise’ this data s that room descriptions and pricing protocols can be attributed to specific buckets denoting room types and deals.
“We have enough scale to create a set of ‘pseudo-standards’ which we can implement,” said Waters. “Getting data standardised is very hard. This is one of the things we are working on.”
Waters believes the work Amadeus is doing has the potential to spur a new era of innovation in hotel room distribution.
“We have done the heavy lifting to make that data easily accessible,” he said. “We only charge for what you use, so that means the barriers to entry are very, very low.
“That’s going to foster innovation and competition, particularly online in a market where we have seen huge consolidation.
“There is demand from hotels and other travel agencies to find an alternative because that consolidation has created quite a lot of economic challenges.”